Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
Amendment of the Commission's Rules
Regarding Installment Payment Financing for
Personal Communications Services (PCS)
Licensees
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WT Docket No. 97-82
ORDER ON RECONSIDERATION
Adopted: January 16, 2001 Released: January 18, 2001
By the Commission:
TABLE OF CONTENTS
Heading Paragraph #
I. INTRODUCTION 1
II. BACKGROUND 2
III. DISCUSSION 6
A. Reconfiguration of C Block Spectrum License Size 6
B. Eligibility Restrictions Under a Tiered Approach 9
C. Competitive Bidding Design 16
D. Bidding Credits 19
E. Transfer Requirements 23
IV. ORDERING CLAUSE 27
V. APPENDIX A
I. INTRODUCTION
1. In this Order on Reconsideration ("Order on Reconsideration"), we address five petitions for
reconsideration ("Petitions") of the Commission's Sixth Report and Order in WT Docket No. 97-82
("C/F Block Sixth Report and Order"), in which we modified the auction and service rules for C and F
block broadband Personal Communications Services (PCS) licenses. For the reasons set forth below, we
deny these Petitions and affirm our findings in the C/F Block Sixth Report and Order.
II. BACKGROUND
2. The Commission outlined the original framework for C and F block auctions in the 1994
Competitive Bidding Fifth Report and Order, establishing the C and F blocks as "set-aside" licenses for
"entrepreneurs" in which eligibility would be restricted to entities below a specified financial threshold.
These provisions were consistent with Congress' mandate to promote participation of small businesses,
rural telephone companies, and businesses owned by members of minority groups and women
(collectively "designated entities") in the provision of spectrum-based services. In addition, the
Commission adopted special provisions for the C and F blocks to assist designated entities.
3. Section 309(j)(4) of the Communications Act directs the Commission, in prescribing
regulations to implement the objectives of Section 309(j)(3), to, inter alia: (1) establish performance
requirements to ensure prompt delivery of service to rural areas and prevent warehousing of spectrum by
licensees; (2) prescribe area designations and bandwidth assignments that promote an equitable
geographic distribution of licenses and services, economic opportunity for a wide variety of applicants,
including designated entities, and rapid deployment of services; and (3) ensure that designated entities
are given the opportunity to participate in the provision of spectrum-based services, and, for such
purposes, consider using bidding preferences and other procedures.
4. The Commission has held four entrepreneurs' block broadband PCS auctions to date. The
initial C block licenses were awarded through two auctions, Auction No. 5, which ended on May 6, 1996,
and Auction No. 10, which concluded on July 16, 1996. Auction No. 11, the initial F block auction,
ended on January 14, 1997, and also included D and E block licenses. Auction No. 22, which concluded
on April 15, 1999, made available C and F block licenses that had been returned to, or reclaimed by, the
Commission. The inventory for Auction No. 35, which began on December 12, 2000, includes 422
licenses covering 195 various Basic Trading Areas (BTAs). The 422 licenses include 312 C block 10
MHz licenses, 43 C block 15 MHz licenses, and 67 F block 10 MHz licenses.
5. On June 7, 2000, we released a Further Notice of Proposed Rulemaking ("Further Notice")
which set forth tentative conclusions and proposals concerning the C and F block rules. On August 29,
2000, we released the C/F Block Sixth Report and Order, which resolved the issues raised in the Further
Notice and revised the service and auction rules for the auction of C and F block broadband PCS licenses
in furtherance of the various goals of Section 309(j) of the Communications Act. The C/F Block Sixth
Report and Order, among a number of other modifications to the Commission's rules, reconfigured the
size of C block spectrum license size; removed the entrepreneur eligibility restrictions (permitted "open"
bidding) for some, but not all, licenses available in Auction No. 35 and in future C and F block
auctions; eliminated bidding credits in closed bidding; and modified the transfer restrictions for C and F
block licenses. As addressed more fully below, Petitioners challenge a number of the modifications to
the C and F block service and auction rules adopted in the C/F Block Sixth Report and Order.
III. DISCUSSION
A. Reconfiguration of C Block Spectrum License Size
6. Background. In the C/F Block Sixth Report and Order, we reconfigured each 30 MHz C
block license available in Auction No. 35, or any subsequent auction, into three 10 MHz C block
licenses.
7. Discussion. All five of the petitioners object to the Commission's decision to split the 30
MHz C block licenses into three 10 MHz licenses. Petitioners argue that a 10 MHz license is
insufficient to provide advanced mobile services. We considered and rejected similar arguments in the
C/F Block Sixth Report and Order. As explained below, we decline to further reconfigure the available
C block licenses and we affirm our decision to provide for three 10 MHz C block licenses.
8. As the petitioners have not provided any new rationale to justify deviating from our
conclusion in the C/F Block Sixth Report and Order, we decline to reconsider our decision to divide each
available 30 MHz C block license into three 10 MHz licenses. Historically 10 MHz has been one of the
principal license sizes used in broadband PCS. In the C/F Block Sixth Report and Order, we found that
10 MHz is a viable minimum license size. Moreover, we note that our rules permit aggregation, subject
to the spectrum cap, and a 10 MHz license allows bidders to acquire additional spectrum in particular
markets. Further, we believe dividing the spectrum into three 10 MHz C block licenses should promote
a wider dissemination of licenses, provide bidders with more flexibility to adapt their bidding strategies
to meet their business plans, and should make licenses more affordable, especially for entrepreneurs.
As we noted in establishing both 20 MHz and 10 MHz licenses for wireless use in the 700 MHz service,
10 MHz wireless licenses "should prove of interest to parties in the record who desire spectrum to deploy
innovative wireless technologies, including high-speed Internet access, that do not require as much
spectrum." Thus, we continue to believe that this reconfiguration, along with the other rule
modifications adopted in the C/F Block Sixth Report and Order, meets the diverse needs of both large
and small carriers seeking to participate in the next C and F block auction. The reconfiguration ensures
the most efficient use of spectrum through the competitive bidding process while at the same time
promoting wider auction participation and license distribution in accordance with the goals of Section
309(j) of the Communications Act. Lastly, as explained below, we note that we have retained
entrepreneur eligibility restrictions for some C block licenses to ensure that entrepreneurs are provided
greater opportunities to acquire spectrum to fulfill their business needs.
B. Eligibility Restrictions Under a Tiered Approach
9. Background. In the C/F Block Sixth Report and Order, we divided the BTAs into two
categories, "Tier 1" BTAs and "Tier 2" BTAs. Tier 1 comprises BTAs with populations that, according
to the 1990 census, are equal to or greater than 2.5 million; and Tier 2 comprises the remaining BTAs.
We decided to establish open bidding (bidding without entrepreneur eligibility restrictions) for two of the
three newly reconfigured 10 MHz C block licenses in Tier 1 and for one of the three newly reconfigured
10 MHz C block licenses in Tier 2. We also adopted open bidding for all F block licenses available in
Auction No. 35 and in all future auctions.
10. Discussion. Tiers. Northcoast urges the Commission to reconsider and simplify its tiering
and eligibility restrictions by eliminating all tiering and by allowing open bidding only for a single 10
MHz C block license in all markets. Northcoast asserts that, under the new tiering rule, it will be
unable to meet its business plans because it will not be able to competitively bid for available C block
spectrum in markets with a population above 2.5 million. We considered and rejected similar
arguments in the C/F Block Sixth Report and Order. We continue to believe that this approach is, in
conjunction with the other modifications to the entrepreneur eligibility restrictions, the most effective
method of accommodating the various business plans of both small and larger carriers and is fully
consistent with the statutory goals for competitive bidding. This approach, in conjunction with the
changes in entrepreneur eligibility restrictions, makes more spectrum available for "open" bidding in the
most populous markets where the demand for spectrum by existing CMRS carriers is the greatest and the
prospects of a spectrum shortage for these carriers is the most acute. At the same time, this approach
keeps most of the C block spectrum (i.e. 20 MHz) closed in all but the very largest markets, while also
retaining restricted eligibility for some spectrum (i.e. 10 MHz) even in those latter cases. Thus, under
our new rules, entrepreneurs will have an opportunity to acquire additional spectrum on a set-aside basis
in all available C block markets, which should assist them in achieving their business goals and
objectives. At the same time, our new rules also take into account the need of many large carriers to
acquire additional spectrum. In adopting this approach, we have also taken into account Section
309(j)(3) of the Communications Act which requires us to promote a variety of objectives, including but
not limited to, the promotion of economic opportunity and competition, and the dissemination of licenses
among a wide variety of applicants, in order to serve the needs of the public. We continue to believe
that "our decision to establish two tiers with 2.5 million population demarcation represents the most
reasonable balancing of the various competing public interest factors that bear on this issue." For the
foregoing reasons, we affirm our decision in the C/F Block Sixth Report and Order to utilize a tiered
approach, limiting non-entrepreneurs participation to certain markets.
11. 30 MHz and 15 MHz C block licenses. Alpine maintains that the Commission, in
eliminating some of the entrepreneur eligibility restrictions, failed to consider the 309(j)(3) statutory
objectives, particularly the objective to avoid the excessive concentration of licenses. Additionally,
several petitioners state that the record does not support the Commission's decision to eliminate some of
the entrepreneur eligibility restrictions. These petitioners assert that the majority of the commenters
favored maintaining the entrepreneur eligibility restrictions. As discussed below, by eliminating some,
but not all, of the C block entrepreneur eligibility restrictions, we give effect to, and reasonably balance,
as many of the Section 309(j) objectives as possible.
12. Section 309(j)(3) directs the Commission to seek to promote a variety of objectives,
including economic opportunity, competition, and the rapid deployment of new technologies and services
by, inter alia, disseminating licenses among a wide variety of applicants. In certain instances, these
objectives conflict, thus requiring the Commission to balance the competing objectives. Section 309(j)
does not require the Commission to seek to promote the participation of small businesses in PCS auctions
at the expense of other enumerated 309(j)(3) objectives nor does it give one objective greater weight than
another objective. In balancing the 309(j)(3) objectives, including the avoidance of the excessive
concentration of licenses, we reviewed the record before us and have taken into account the needs of both
large and small carriers to acquire additional spectrum to provide services and/or to satisfy their business
plans. In the C/F Block Sixth Report and Order, we concluded that it was fair and appropriate to
apportion the spectrum to accommodate the interests of large carriers to obtain additional spectrum to
"fill out" regional or national service areas. At the same time, we decided to maintain a significant set-
aside of C block spectrum for entrepreneurs. As previously explained, section 309(j) does not mandate
the use of set-asides or any other method to promote the participation of small businesses in spectrum
auctions, particularly in light of changed circumstances.
13. Three petitioners argue that the record provides no justification for providing large carriers
with additional spectrum. Specifically, they point to recent general statements in news articles where
two large carriers asserted that they have a sufficient amount of spectrum. Therefore, petitioners argue
that the record provides no justification for providing them with an opportunity to acquire additional
spectrum. As we previously discussed, circumstances in the industry have changed dramatically, and
continue to change, since the implementation of our rules in 1994. The introduction of wireless
Internet, advanced data, and 3G services, as well as global competition within these services, has created
a shortage of suitable available spectrum. The statement of two large carriers, as reported in two recent
news articles, does not undermine the record as a whole, particularly where other large carriers claim that
they need additional spectrum to provide advanced services or to fulfill their business plans. We
believe that apportioning the spectrum as described above promotes the further development of CMRS
competition and innovation, especially in large markets. For these reasons, we affirm our position in the
C/F Block Sixth Report and Order to remove the eligibility restrictions for some, but not all, of the
available C block spectrum.
14. F block licenses. Four petitioners requested that the Commission retain entrepreneur
eligibility requirements for F block licenses. These petitioners argue that the Commission failed to
provide support for eliminating the F block set-aside, particularly in light of the success of F block
licensees. For instance, Northcoast argues that since entrepreneurs are in the process of building out
their systems and service has not been delayed to the public, the entrepreneur eligibility requirement
should be maintained. These petitioners have not provided any new rationale to justify the preservation
of the F block set-aside. We considered arguments such as Northcoast's when we reached our decision
in the C/F Block Sixth Report and Order. As we stated there, the need for additional open spectrum that
exists in the C block markets also extends to the F block markets. Additionally, open bidding for F
block licenses may lead to more expeditious provision of wireless services to the public. The C and F
blocks have been subject to different regulatory requirements, reflecting the different bidding and
marketplace histories of the two blocks as well as the corresponding different equity and reliance
concerns applicable to bidders and licensees in each of the blocks. Taking into account the divergent
history of F block, we decided to remove the entrepreneur eligibility restrictions and to allow open
bidding for all available F block licenses in Auction No. 35 and in future auctions. This determination
was informed by the fact that almost every market with an available F block license already has a
significant 30 MHz C block entrepreneur presence. Thus, we found that we could modify the F block
eligibility rules while preserving the diversity of opportunity and service that are goals of Section
309(j). For these reasons, we affirm our position in the C/F Block Sixth Report and Order to allow
open bidding and eliminate the F block entrepreneur eligibility restrictions.
15. Unsold set-aside licenses. For Auction No. 35, in the C/F Block Sixth Report and Order, we
eliminated entrepreneur eligibility requirements for all C block licenses that were available but not sold
in Auction No. 22. We also decided to eliminate the set-aside for any C and F block license that was
available, but not sold, in any subsequent auction. RTG and OPASTCO urge the Commission not to
eliminate entrepreneur eligibility requirements for licenses unsold in Auction No. 22, but rather provide
entrepreneurs with one more opportunity to bid on such licenses on a closed basis as well as on future
unsold licenses under a set-aside approach. We previously considered RTG and OPASTCO's position
and determined that closed bidding for this spectrum will not result in the acquisition and construction of
these licenses. The failure of certain 15 MHz C block licenses to sell in Auction No. 22 indicates that
closed bidding for these licenses will not expeditiously result in the acquisition and construction of these
licenses and in service to the public. By lifting the eligibility restrictions for these unsold licenses, we
seek to prevent additional delays in their utilization. For these reasons, we affirm our decision in the C/F
Block Sixth Report and Order and will provide all bidders with an opportunity to acquire previously
unsold set-aside licenses.
C. Competitive Bidding Design
16. Background. In the C/F Block Sixth Report and Order, we rejected Nextel
Communications, Inc.'s ("Nextel") bulk bid proposal. We concluded that Nextel's proposal would
exclude all but a very few competitors. We also left to the Bureau, under its existing delegated
authority, the final selection of a competitive bidding design and methodology for Auction No. 35,
including the decision whether to implement a combinatorial (package) bidding design for the auction.
On September 6, 2000, the Bureau released the Comment Public Notice, which invited public comment
on its auction procedures for the C and F block auction, including the proposal to adopt a simultaneous
multiple round bidding methodology. On October 5, 2000, the Bureau released the Procedures Public
Notice in which, inter alia, it determined to utilize a simultaneous multiple round bidding design for
Auction No. 35. Subsequently, on November 6, 2000, Nextel filed a petition seeking to change the
Auction No. 35 design to allow package bidding. The Bureau denied Nextel's Petition.
17. Discussion. As an alternative to the Commission reserving at least 20 MHz of spectrum for
entrepreneurs, RTG and OPASTCO have requested that the Commission provide entities with a means of
combinatorial bidding on the disaggregated licenses. We reject this alternative because, as the Bureau
previously explained in response to Nextel's request for combinatorial bidding, the public interest would
not be served by implementing package bidding for Auction No. 35. Implementation of a package
bidding design would have necessitated a notice and comment period due to the unique auction and
service rules applicable to Auction No. 35. The public had ample opportunity to request an alternative
bidding design prior to the start of Auction No. 35. First, we sought comment, in the Further Notice, on
possible ways for bidders to efficiently aggregate licenses in Auction No. 35. The Bureau also invited
public comment on its proposal to adopt simultaneous multiple round bidding. No party filed comments
contesting this bidding methodology. In denying Nextel's Petition, the Bureau found that establishing
combinatorial bidding, after the short-form application filing deadline, would impose delay on auction
participants that would not be in the public interest.
18. Moreover, the Commission has not yet conducted an auction utilizing combinatorial bidding
due to the complexity of implementing such a bidding design. Although the Bureau has adopted package
bidding procedures for the auction of the 747-762 and 777-792 MHz bands (Auction No. 31), the
package bidding procedures established for Auction No. 31 were not designed with Auction No. 35 in
mind. Accordingly, absent significant modification, such a design would have been complex and
impractical to implement for Auction No. 35, particularly in light of the large number of licenses
involved. Further, applicants prepared business plans based on the Bureau's bidding methodology
announced in the Procedure Public Notice. As noted, parties that need additional spectrum have the
ability to aggregate licenses, subject to the CMRS spectrum cap. For these reasons, we affirm that the
final selection of a bidding design is within the Bureau's delegated authority and we will not disturb the
Bureau's final selection of a simultaneous multiple round bidding design for Auction No. 35.
D. Bidding Credits
19. Background. In the C/F Block Sixth Report and Order, we decided to maintain existing
small and very small business bidding credits (15 percent and 25 percent, respectively) for licenses won
in open bidding and to eliminate bidding credits for licenses won in closed bidding. With respect to
open bidding, we concluded that bidding credits of 15 and 25 percent will allow effective competition by
small businesses. With respect to closed bidding, we concluded that the continued use of bidding
credits in restricted auctions would not serve its intended purpose.
20. Discussion. Open Bidding. We received petitions from Northcoast, RTG and OPASTCO
requesting an increase in bidding credits in open auctions. Northcoast argues that retaining the existing
levels of bidding credits (15 and 25 percent) in open bidding will not permit effective competition by
small businesses. Similarly, RTG and OPASTCO argue that the Commission should increase bidding
credits in open auctions to ensure that entrepreneurs have an opportunity to participate. We considered
and rejected these arguments in the C/F Block Sixth Report and Order. We noted that in our
Specialized Mobile Radio (SMR) 900 MHz auction - using bidding credits of 10 percent and 15 percent
- 75 percent of the winning bidders were small businesses, winning 26 percent of the licenses.
Moreover, in Auction No. 11, the auction of D, E, and F block licenses, small and very small business
were the high bidders for 141 of the 986 D and E block licenses won in that auction, even though bidding
credits were not available for D and E block licenses. Thus, small businesses have proven to be
competitive in auctions even where we have provided for lower bidding credits than what we have
adopted for Auction No. 35. Northcoast, RTG and OPASTCO have not provided any new rationale to
justify increasing the level of bidding credits for licenses subject to open bidding. Therefore, for open
licenses, we will maintain the current level of bidding credits for small and very small businesses.
21. Closed Bidding. With respect to closed bidding, four petitioners object to the Commission's
decision to eliminate bidding credits in closed auctions. These petitioners argue that by eliminating the
bidding credits in closed auctions, the Commission has violated the congressional mandate pursuant to
Section 309(j) to provide small and very small businesses with a meaningful opportunity to compete in
spectrum auctions. Specifically, Northcoast, NTCA, and RTG and OPASTCO are concerned that,
without bidding credits, small and very small businesses will be unable to compete against
"grandfathered" entities that are generating millions of dollars in gross revenues.
22. We considered and rejected this argument in the C/F Block Sixth Report and Order. We
noted that two groups are included among those entities eligible to participate in the entrepreneurs' block
auctions. One group consists of well-capitalized new entities with small gross revenues. Another
group consists of older companies with small total assets and net revenues, but high gross revenues. As
we explained, this situation creates an anomaly because the first group, the well-capitalized new entities,
may qualify for bidding credits, while the second group, the older companies, may not qualify for bidding
credits. If we were to retain bidding credits in closed bidding, it may skew these auctions in favor of
well-capitalized new entities that are uniquely structured to protect large investors from attribution.
Moreover, although there may be a number of "grandfathered" entities participating in Auction No. 35,
we have found that small and very small businesses have been previously successful in open auctions
without bidding credits. As we are not persuaded that small and very small businesses will be unable to
effectively compete against "grandfathered" entities, and as we do not want to undermine the
"grandfather" exception, we reject petitioners' request to provide bidding credits in closed auctions. We
continue to believe that small and very small businesses will have a meaningful opportunity to compete
in Auction No. 35 and in future spectrum auctions. For this reason, we affirm our decision in the C/F
Block Sixth Report and Order to eliminate bidding credits in closed auctions.
E. Transfer Requirements
23. Background. In the C/F Block Sixth Report and Order, we modified the transfer restrictions
for C and F block licenses. Specifically, we concluded that C and F block spectrum licenses won
pursuant to open bidding would not be subject to a five-year holding and limited transfer rule. With
respect to closed bidding, we concluded that a licensee would be allowed to assign or transfer a license to
a non-entrepreneur as soon as the licensee completed its first construction benchmark. Additionally,
we eliminated unjust enrichment payments for licenses won in Auction No. 5 and Auction No. 10, but
retained unjust enrichment payments for licenses that were acquired in Auction No. 11 and Auction No.
22. Despite requests from commenters, we decided not to allow a carrier to exchange or transfer
restricted C or F block licenses during the holding period where the carrier could demonstrate
"substantial service" throughout its system, but not in the particular market that would be affected by the
transfer.
24. Discussion. On August 9, 2000, fourteen days before adoption of the C/F Block Sixth Report
and Order, Congress adopted legislation that grants qualifying Alaska Native regional corporations relief
from the entrepreneur transfer restrictions and unjust enrichment payment requirements. To qualify, the
corporation (or an affiliate thereof) must be organized pursuant to the Alaska Native Claims Settlement
Act, hold a PCS license as of the date of the enactment of the legislation, and either have paid for the
license in full or have complied with the payment schedules for the license. Cook Inlet Region, Inc.
("CIRI") is an Alaska Native regional corporation and meets the requirements of the statute. Thus, this
legislation allows CIRI to transfer or assign a license to a non-entrepreneur without paying any unjust
enrichment penalties. Alpine requests that the Commission, in light of this legislation, revise its
transfer rules so as to apply the same relief afforded CIRI in a uniform manner to all entrepreneurs.
Alpine argues that if relief from the unjust enrichment penalty requirements is not applied to all
entrepreneurs, then this will result in discriminatory application of the Commission's rule. In the
alternative, Alpine asks the Commission to amend its rules to exclude CIRI from Auction No. 35 if all
entrepreneurs cannot be afforded the same relief. CIRI and VoiceStream Wireless Corporation
("VoiceStream") both oppose Alpine's request to exclude CIRI from Auction No. 35. Although CIRI
and VoiceStream do not oppose the elimination of all transfer restrictions for entrepreneurs, both parties
object to Alpine's attempt to utilize a rulemaking proceeding to decide CIRI's eligibility to participate in
Auction No. 35. Verizon opposes Alpine's request to remove all transfer restrictions on licenses won
in closed bidding. Verizon states that, absent the Commission's transfer restrictions, entrepreneurs
could purchase licenses and immediately sell the licenses to non-entrepreneurs.
25. As stated above, we have made several modifications to the C and F block transfer
restrictions. In modifying the transfer restrictions, we have attempted to level the playing field for
entrepreneurs with respect to other licensees, making it easier for entrepreneurs to restructure their
spectrum holdings, provide additional access to capital, and to increase effective competition by
entrepreneurs. The relief accorded CIRI under the statute was specifically authorized by Congress and
narrowly tailored. The legislation, therefore, does not change the Commission's application of its
transfer requirements to all other entrepreneurs. As a matter of legislative initiative, Congress
determined to exempt companies like CIRI from the economic consequences of the application of the
unjust enrichment provisions. Congress could have provided the same relief to all applicants, but instead
Congress chose to narrowly tailor the specific relief. Notably, Congress left intact the statutory directive
of Section 309(j)(4)(E), which requires the Commission to "require such transfer disclosures and
antitrafficking restrictions and payment schedules as may be necessary to prevent unjust enrichment as a
result of the methods employed to issue licenses and permits." Therefore, Congress' determination to
create an exemption that applies to CIRI does not show legislative intent to exempt all applicants from
the antitrafficking and unjust enrichment provisions. Nor does Congress' action negate the statutory
purpose served by the transfer restrictions. Providing all applicants with the specific relief provided to
CIRI would circumvent the underlying purpose of retaining a set-aside in that entrepreneurs could
acquire a license in a closed auction and immediately sell the newly acquired license on the open market
at windfall prices without paying any penalties. We think that such a result is neither consistent with
making licenses available for closed bidding by entrepreneurs, in furtherance of Section
309(j)(4)(D)(requiring the Commission to ensure that small businesses, inter alia, are given the
opportunity to participate in the provision of spectrum-based services, and, for such purposes, consider
the use of bidding preferences and other procedures) nor, as indicated above, with the directives of
Section 309(j)(4)(E) (requiring various measures to prevent unjust enrichment).
26. Moreover, the legislation that provides CIRI with this relief does not at the same time, in and
of itself, render CIRI ineligible for entrepreneur status in Auction No. 35, or in any future auction. CIRI's
eligibility to participate in Auction No. 35 as an entrepreneur is dependent on CIRI satisfying our
entrepreneur eligibility restrictions. The instant rulemaking proceeding is not the proper forum to
challenge congressional legislation or to determine CIRI's entrepreneur status for Auction No. 35. After
the Commission by public notice announces that long-form applications have been accepted for filing,
Alpine and/or any other applicant, if they choose to do so, will have an opportunity to challenge CIRI's
entrepreneurial status by way of a petition to deny filed with the Commission. For these reasons, we
will not further revise its transfer rules or amend its rules to exclude CIRI from Auction No. 35.
IV. ORDERING CLAUSE
27. Accordingly, IT IS ORDERED THAT, pursuant to Sections 4(i), 5(b), 5(c)(1), 303(r), and
309(j) of the Communications Act of 1934, as amended, 47 U.S.C. Sections 154(i), 155(b), 156(c)(1),
303(r), and 309(j), the Petitions filed by Alpine PCS, Inc, National Telephone Cooperative Association,
Northcoast Communications, LLC, Office of Advocacy of the United States Small Business
Administration, and The Rural Telecommunications Group and the Organization for the Promotion and
Advancement of Small Telecommunications Companies filed in response to the C/F Block Sixth Report
and Order are DENIED.
FEDERAL COMMUNICATIONS COMMISSION
Magalie Roman Salas
Secretary
V. APPENDIX A
LIST OF PLEADINGS
Petitions for Reconsideration
1. Alpine, PCS, Inc. ("Alpine")
2. National Telephone Cooperative Association ("NTCA")
3. Northcoast Communications, LLC ("Northcoast")
4. Office of Advocacy of the Unites States Small Business Administration ("Advocacy")
5. The Rural Telecommunications Group ("RTG") and the Organization for the Promotion and
Advancement of Small Telecommunications Companies ("OPASTCO")
Oppositions
1. Cook Inlet Region, Inc. ("CIRI")
2. Verizon Wireless ("Verizon")
3. VoiceStream Wireless Corporation ("VoiceStream")
Notice of Ex Parte Meetings
1. The Rural Telecommunications Group ("RTG")
2. The Rural Telecommunications Group ("RTG"), National Telephone Cooperative Association
("NTCA"), Organization for the Promotion and Advancement of Small Telecommunications
Companies ("OPASTCO"), and Office of Advocacy, U.S. Small Business Administration
("Advocacy")
Amendment of the Commission's Rules Regarding Installment Payment Financing for Personal
Communications Services (PCS) Licensees, WT Docket No. 97-82, Sixth Report and Order and Order on
Reconsideration, FCC 00-313 (rel. August 29, 2000) ("C/F Block Sixth Report and Order"). A list of pleadings is
included as Appendix A.
The Commission required that in order to be eligible to bid, an applicant, including attributable
investors and affiliates, must have gross revenues of less than $125 million in each of the last two years and less
than $500 million in total assets. See Implementation of Section 309(j) of the Communications Act - Competitive
Bidding, PP Docket 93-253, Fifth Report and Order, 9 FCC Rcd 5532, at 5581-82, 115 (1994) ("Competitive
Bidding Fifth Report and Order"). These applicants are called "entrepreneurs" and the licenses that they are
eligible to bid on are "set-asides". But note that, under the Commission's "grandfathering" exception, any entity
that was eligible for, and participated in, either of the first two C block auctions (Auction No. 5 or Auction No. 10),
will be eligible to bid in C block spectrum auctions that begin within two years of the start of Auction No. 22,
March 23, 1999. An entity that qualifies under this exception is called a "grandfathered" entity. 47 C.F.R.
24.709(b)(9)(i); see also Amendment of the Commission's Rules Regarding Installment Payment Financing for
Personal Communications Services (PCS) Licenses, WT Docket No. 97-82, Fourth Report and Order, 13 FCC
Rcd 15, 743, at 15,751-52 13, 15 (1998) ("C Block Fourth Report and Order").
See 47 U.S.C. 309(j)(4)(D), 47 U.S.C. 309(j)(4)(D).
See Competitive Bidding Fifth Report and Order, 9 FCC Rcd 5532; Implementation of Section
309(j) of the Communications Act - Competitive Bidding, PP Docket 93-253, Fifth Memorandum Opinion and
Order, 100 FCC Rcd 403 (1994) ("Competitive Bidding Fifth Memorandum Opinion and Order").
47 U.S.C. 309(j)(4).
E block licenses were also included in Auction No. 22.
See "C and F Block Broadband PCS Spectrum Auction Scheduled for December 12, 2000,"
Public Notice, DA 00-2259 (rel. October 5, 2000).
See Amendment of the Commission's Rules Regarding Installment Payment Financing for
Personal Communications Services (PCS) Licensees, WT Docket No. 97-82, Further Notice of Proposed
Rulemaking, 15 FCC Rcd 9773 (2000) ("Further Notice").
See C/F Block Sixth Report and Order.
See Section 309(j) of the Communications Act of 1934, as amended ("Communications Act"), 47
U.S.C. 309(j).
See C/F Block Sixth Report and Order; see generally 24 C.F.R. 24.712(b) and 24.717(b).
Both entrepreneurs and non-entrepreneurs can bid on licenses in "open" bidding. Only entrepreneurs can bid on
licenses in "closed" bidding.
Id.
C/F Block Sixth Report and Order at 12.
The Office of Advocacy of the United States Small Business Administration ("Advocacy"),
Alpine, PCS, Inc. ("Alpine"), Northcoast Communications, LLC ("Northcoast"), The Rural Telecommunications
Group and the Organization for the Promotion and Advancement of Small Telecommunications Companies ("RTG
and OPASTO"), National Telephone Cooperative Association ("NTCA") (collectively "Petitioners").
See Alpine Petition at 6-7, Northcoast Petition at 2, RTG and OPASTCO Petition at 13-16, 18-
20, NTCA NTCA Petition at 2-3, Advocacy Petition at 1-3; see also RTG Ex Parte and RTG, NTCA, OPASTCO,
and Advocacy Ex Parte at 1-2.
See C/F Block Sixth Report and Order at 13-15.
C/F Block Sixth Report and Order 14.
Id.; see also Further Notice at 9784, 16 (where we tentatively concluded that a 10 MHz C
block license is a viable minimum size for voice and some data services).
See Further Notice at 9784, 16.
See C/F Block Sixth Report and Order at 13-14.
In the Matter of Service Rules for 746-764 MHz and 776-794 MHz Bands, and Revisions to Part
27 of the Commission's Rules, WT Docket No. 99-168, First Report and Order, 15 FCC Rcd at 478, 3 (2000)
("700 MHz First Report and Order").
See C/F Block Sixth Report and Order at 15.
Id.
Id.
Id. at 18.
Id. at 20.
Id. at 24.
Northcoast Petition at 7-8. See generally Advocacy at 1-3.
Northcoast Petition at 7-8.
See C/F Block Sixth Report and Order at 18-23.
Id. at 19.
Id.
47 U.S.C. 309(j)(3).
C/F Block Sixth Report and Order at 19.
Alpine Petition at 2-5.
See Advocacy Petition at 1-3; Alpine Petition at 6-7; RTG and OPASTCO Petition at 9-17; see
also RTG Ex Parte and RTG, NTCA, OPASTCO and Advocacy Ex Parte at 1.
See Advocacy Petition at 1-3; Alpine Petition at 6-7; RTG and OPASTCO Petition at 9-17; see
also RTG Ex Parte and RTG, NTCA, OPASTCO and Advocacy Ex Parte at 1.
47 U.S.C. 309(j)(3).
47 U.S.C. 309(j); see also 47 U.S.C. 309(j)(4) (requires the Commission to ensure that small
businesses and others "are given the opportunity to participate in the provision of spectrum based services" and
directs the Commission to consider the use of mechanisms that will further that end.)
C/F Block Sixth Report and Order at 23.
Id. at 23.
See C/F Block Sixth Report and Order at 22; 47 U.S.C. 309(j).
See Alpine Petition at 7-8; Northcoast Petition at 5-7; RTG and OPASTCO Petition at 11.
See Alpine Petition at 7-8; Northcoast Petition at 5-7; RTG and OPASTCO Petition at 11 (citing
"Nextel's Lost Narrrow, Subscriber List Grows", Washington Post, Jul 19, 2000, at E1-E2; "No Spectrum Worries
for Sprint," Wireless Review, September 15, 2000, at 9).
See Alpine Petition at 7-8; Northcoast Petition at 5-7; RTG and OPASTCO Petition at 11.
C/F Block Sixth Report and Order at 23 (citing Further Notice, 15 FCC Rcd at 9788, 25).
See, e.g., Jill Carroll and Leslie Cauley, Demand for Airwaves May Create Shortage, The Wall
Street Journal, Aug. 2, 2000, at A2 (The explosion in wireless communications and the emergence of 3G
technology have resulted in a shortage of spectrum to satisfy the huge demand.); Susan Schmidt and Peter S.
Goodman, Spectrum Up for Grabs, The Washington Post, July 11, 2000, at E1 ("[T]he 21st -century battle over the
spectrum is a scramble for a highly valuable resource in increasingly short supply."); Implementation of Section
6002(b) of the Omnibus Budget Reconciliation Act of 1993; Annual Report and Analysis of Competitive Market
Conditions With Respect to Commercial Mobile Services, Fifth Report, FCC-00289, at Part II.A.1.h (rel. August
18, 2000).
See, e.g., SBC Petition at 3, 11, 15; see also, e.g., the following comments and reply comments
to the SBC and Nextel Petitions: AT & T Comments at 2-4; Bell Atlantic Comments at 9-10; SBC Comments at
12-13.
C/F Block Sixth Report and Order at 23.
See Advocacy Petition at 5-6, Alpine Petition at 10-11, Northcoast Petition at 8-9, RTG and
OPASTCO Petition at 20-21; see also NTCA Petition at 2-3; RTG Ex Parte and RTG, NTCA, OPASTCO and
Advocacy Ex Parte at 2. But see Verizon Opposition at 5-6.
See Advocacy Petition at 5-6, Alpine Petition at 10-11, Northcoast Petition at 8-9, RTG and
OPASTCO Petition at 20-21; see also RTG Ex Parte.
See Northcoast Petition at 8-9.
C/F Block Sixth Report and Order at 26.
Id.
See Id.; see also Further Notice at 9785-86, 19, 9788, 25, 9790, 31; Amendment of the
Commission's Rules Regarding Installment Payment Financing for Personal Communications Services (PCS)
Licensees, WT Docket No. 97-82, Order on Reconsideration of the Second Report and Order, 13 FCC Rcd at
8377-78, 75-76 (1998) ("C Block Reconsideration Order"); Amendment of the Commission's Rules Regarding
Installment Payment Financing for Personal Communications Services (PCS) Licensees, WT Docket No. 97-82,
Second Report and Order and Further Notice of Proposed Rule Making, 12 FCC Rcd at 16,446, 20 (1997) ("C
Block Second Report and Order").
See Further Notice at 9790, 31.
See C/F Block Sixth Report and Order at 26.
C/F Block Sixth Report and Order at 27. These licenses include both 15 MHz C block licenses
and 10 MHz C block licenses that have been reconfigured from the 30 MHz C block licenses that were available
but not sold in Auction No. 22.
Id.
RTG and OPASTCO Petition at 21-22; see also RTG, NTCA, OPASTCO, and Advocacy Ex
Parte at 2.
See C/F Block Sixth Report and Order at 29.
Id.
C/F Block Sixth Report and Order at 36. Presently, the Commission has before us a Petition
for Expedited Action to Modify the Auction Design for Auction No. 35, the C and F Block Reauction filed by
Nextel Communications, Inc. ("Nextel") on November 6, 2000.
See Id. at 34.
C/F Block Sixth Report and Order at 36.
"C and F Block Broadband PCS Spectrum Auction Schedule for November 29, 2000
Rescheduled for December 12, 2000; Revised List of Available Licenses, Comment Sought on Reserve Prices or
Minimum Opening Bids and Other Procedural Issues," Public Notice, DA 00-2038 at 7 (rel. September 6, 2000)
("Comment Public Notice").
"C and F Block Broadband PCS Spectrum Auction Scheduled for December 12, 2000; Notice
and Filing Requirements for 422 Licenses in the C and F Block Broadband PCS Spectrum Auction, Minimum
Opening Bids, Upfront Payments and Other Procedural Issues for Final Auction Inventory," Public Notice, DA 00-
2259 at 9 (rel. October 5, 2000) ("Procedures Public Notice").
See Petition for Expedited Action to Modify the Auction Design for Auction No. 35, the C and F
Block Reauction filed by Nextel Communications, Inc. (filed November 6, 2000) ("Petition").
In the Matter of Nextel Communications Inc.'s Petition for Expedited Action to Modify the
Auction Design for Auction No. 35, the C and F Block Reauction, Order, DA 00-2825 at 11-12 (rel. December
14, 2000) ("Order").
RTG and OPASTCO Petition at 3, 20.
Order at 11-12.
See Order. Section 309(j)(3)(E) of the Communications Act provides that the Commission must
provide a notice and comment period before the issuance of bidding rules, and after the issuance of bidding rules,
provide an adequate period of time to allow interested parties to develop their business plans. 47 U.S.C.
309(j)(3)(E).
See Further Notice at 9785, 17.
Comment Public Notice at 7. (seeking comment from the public on the proposed bidding
methodology for Auction No. 35).
Comments were filed by AT & T Wireless, Inc., BellSouth Corporation and SBC
Communications, Inc., and Verizon Wireless. Reply comments were filed by AT & T Wireless Services, Inc., and
BellSouth Corporation and SBC Communications, Inc.
Order at 12.
See Order.
C/F Block Sixth Report and Order at 14.
See Id. at 44.
Id. at 44.
Id. at 45.
See Northcoast Petition at 9-11 and RTG and OPASTCO Petition at 22-25; see also RTG,
NTCA, OPASTCO and Advocacy Ex Parte at 2.
See Northcoast Petition at 9-11.
See RTG and OPASTCO Petition at 22-25 and RTG Ex Parte.
See C/F Block Sixth Report and Order at 44.
C/F Block Sixth Report and Order at 44.
Id.
See Alpine Petition at 9-10, Northcoast Petition at 9-11, RTG and OPASTCO Petition at 22-25,
NTCA Petition at 3-6; see also RTG Ex Parte and RTG, NTCA, OPASTCO and Advocacy Ex Parte at 2-3 (also
requesting the Commission to revise its generic auction rules to incorporate a "total assets" test as proposed in the
FNPRM in the Part 1 proceeding. See Amendment of Part 1 of the Commission's Rules - Competitive Bidding
Procedures, Order on Reconsideration of the Third Report and Order, Fifth Report and Order, and Fourth Notice
of Proposed Rule Making, WT Docket No. 97-82, FCC 00-274 (rel. August 14, 2000)). The "total assets" test is
currently part of a FNPRM in the Part 1 proceeding; thus, is not a subject of this rulemaking proceeding.
See Alpine Petition at 9-10, Northcoast Petition at 9-11, RTG and OPASTCO Petition at 22-25,
NTCA Petition at 3-6; see also RTG Ex Parte.
See 47 C.F.R. 24.709(b)(9)(i). A "grandfathered" entity is a qualified applicant that was
eligible for and participated in Auction No. 5 or 10; thus, permitted to bid on closed C block licenses in any
auction that begins on or before March 23, 2001.
See Northcoast Petition at 9-11, RTG and OPASTCO Petition at 22-25, NTCA Petition at 3-6;
see also RTG, NTCA, OPASTCO and Advocacy Ex Parte at 2.
See C/F Block Sixth Report and Order at 45.
Id.
Id.
Id.
Id.
Id.; see also Dobson Comments at 13-16 and Dobson Reply at 5-6.
See C/F Block Sixth Report and Order at 44-45.
Id. at 45.
Id. at 46-53.
C/F Block Sixth Report and Order at 47.
Id. at 49. (The decision to transfer a restricted license to a non-entrepreneur before the end of
the five-year holding period in this manner must be made by those in control of the entrepreneur).
See C/F Block Sixth Report and Order at 51.
C/F Block Sixth Report and Order at 53.
Department of Defense Appropriations of 2001, Public Law 106-259, 8149, 114 Stat. 656
(Aug. 9, 2000). Section 8149 provides:
Licenses Held By Alaska Native Regional Corporation - An Alaska Native regional corporation
organized pursuant to the Alaska Native Claims Settlement Act, or affiliate thereof, that holds a Federal
Communications Commission license in the personal communications service as of the date of enactment
of this section and has either paid for such license in full or has complied with the payment schedules for
such license shall be permitted to transfer and assign without penalty such license to any transferee or
assignee. No economic penalties shall apply to any transfer or assignment authorized under this section.
Any amounts owed to the United States for the initial grant of such licenses shall become immediately due
and payable upon the consummation of any such transfer or assignment. Any application for such a
transfer or assignment shall be deemed granted if not denied by the Commission within 90 days of the
date on which it was initially filed. Any provision of law or regulation to the contrary is hereby amended.
See Department of Defense Appropriations of 2001, Public Law 106-259, 8149, 114 Stat. 656
(Aug. 9, 2000).
Alpine Petition at 12.
Id.
Id.
CIRI Opposition at 1-5 and VoiceStream Opposition at 1, 3-4.
See Id.
Verizon Opposition at 6-7.
Verizon Opposition at 7 (Verizon also argues that Alpine's request to remove all transfer
restrictions illuminates its arguments to maintain the C and F block set-asides).
47 U.S.C. 309(j)(4)(E).
See C/F Block Sixth Report and Order at 53.
See 47 C.F.R. 24.709.
See 47 C.F.R. 1. 2108.
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